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Securing growth through IP

Posted By
Birgitte Andersen

17 December 2012

Giving the keynote speech to a packed room at the Big Innovation Centre, Rt Hon Dr Vince Cable MP, Secretary of State for Business, Innovation and Skills, briefed an invited audience on his vision for developing the UK’s intellectual property landscape to encourage growth and a renewed programme of action for the IPO.

I opened the event with an outline of how effective IP management is important for the UK economy. Here is the speech I gave:

Today’s meeting is in connection with the government’s ongoing programme of intellectual property reform, designed to ensure that the UK’s intellectual property framework is fit for modern needs and enables growth. Last time Vince Cable was in this room was at the launch of the Big Innovation Centre’s campaign to change Britain – to put growth and jobs into the economy by delivering a step-change in its capacity to innovate and generate wealth. Today’s campaign is to secure growth through IP.

Vince Cable’s briefing today on a vision for developing the UK’s intellectual property landscape to encourage growth demonstrates more force behind our policy tools. It also demonstrates a matter of urgency in informing IP policy in the UK.

In a highly dynamic global economy, innovation, business models, and consumer behaviour are radically reforming all the time. The regulatory regime must keep up with them – and today is one important step in this direction. Before handing over to Vince Cable to give the keynote speech, I will briefly state why effective IP management is important for the UK economy.

The short answer is that innovation and creativity are crucial to the UK’s competitive edge, and are the most dynamic sources for growth and welfare. That makes IP a vitally important tool for our economic growth.

The longer answer is that IP-based growth in the 21th century only happens for sectors and economies when effective IP management:

• is ‘ambitious, bold and enterprising’
• acknowledges that innovation and commercial value are created from collaborative and coordinated effort and progressive business models

• focuses on growing the common value pie.

Ambitious, bold and enterprising IP policies must focus on whether they create and expand the markets for ideas and creative cultural expressions; on whether they maintain revenue for the creative producers of ideas and creative content regardless of ‘the distribution of rights’, regardless of ‘industry structures’, and regardless of whether content is paid for or ‘free and compensated in other ways’ through alternative business models.

This is crucial because it is through these markets where ideas and creative expression are traded and exchanged that we use IP to:

• recover research and development costs and reward inventiveness and creativity throughout the economic system
• stimulate innovation-based competition
• enable cultural expansion and creative expressions of ideas to flow with speed and intensity
• stimulate entrepreneurship and facilitate sustainable development of firms and industries

This is what success looks like. But, of course, over the last decade there has been an increasingly evidence-based discussion on whether the IP system was actually delivering all these benefits to the economy and society.

And it had become a paradox that while government has made IPR more exclusive and stronger over the last decades, many firms have managed IP in more open and less exclusive contexts. Corporate innovation IP strategies have increasingly been about sharing ideas, learning and feedback and joint standards setting. For example, every truly great inventor has acknowledged that his or her achievement is built on integrating the achievements of others. Such findings from the business world are available to all, and also the reason for the increasing use of open source communities, creative commons licences, etc. The Big Data revolution will present new challenges to the IPR system.

Other places where more open IP strategies have been used are in relation to building business networks and increasing market share through a broader user base. There is now evidence that firms from several sectors that manage their IP in more open contexts are superior performers (in terms of turnover per employee). Exceptions and limitations of IP holders could become an essential asset to drive the economy forward.

Commercial value from IP is created via joint effort. That is, commercial aspects of successful innovations can only be realised if there is an excitement and ‘collective action’ across creators, distributors and users. Content producers, distributors and users need to work together in coordinated business models. We cannot afford anything else.

Effective IP management focuses on growing the common value pie. What stops us now from growing the value pie is not simply market failures, but coordination or business model failures.

For example, artists do not need to be poor. The entertainment industry is thriving more than ever. That 10% of artists make more than three quarters of the income – and persistently so for decades, before the digital economy – is not a market failure problem but a business model issue.

Also, effective IP enforcement must ensure that the new and novel entrepreneurial search-engines and online registers are being celebrated for their frontier thinking. They have too often been hounded for upsetting the dominant position of existing market actors. And here I speak as a defence witness from IPR court cases.

Finally, effective IP enforcement acknowledges that consumers of free online music content purchase more entertainment product, including music, DVDs, concert and cinema tickets. The evidence for this is based upon a Canadian household survey and has been accepted by the courts.

We must re-think how the new business models can incentivise and reward the idea and cultural generators, catalysts, entrepreneurs and venture capitalists in the creative spheres; but also deliver value to our consumers and users who of course also deserve the best possible options in terms of variety, quality and price.

The IP reform going through parliament is topical, relevant, timely, and certainly highlighting some controversial topics for debate.

However, deliberative democracy is as much about acknowledging opposite points of view as it is about consensus, and in British politics there also seems to be a new trend of trust, coordination and collaboration across different viewpoints.

Only such a government can make a real difference to the UK economy – the difference we now see in the IP reform passing through parliament.

For this reason, it is an especial honour to welcome our Secretary of State, Vince Cable, here today.